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03 June
2015
Startups
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UBER: In the Hot Seat in Mexico

This past week I spent it in Mexico DF and the usual challenge of dealing with traffic and transportation was made harder due to public demonstrations by taxi drivers against Uber, Cabify, and similar services.

In the past year, Uber which I use in Miami and almost everywhere I travel to, has made Mexico’s transportation nightmare much more manageable.   Uber cars are safe, cheaper than hotel cabs, comfortable and clean, there is no need to pay in local currency, and they even offer you water and the music you want to listen to.    Those who travel as frequently as I do, know that this few “amenities” can make your trip much more productive and enjoyable.

But this past week was slightly different as the city was gridlocked by the “Uber” demonstrations, the other usual “marchas” as the Mexicans call them, and to top it off, torrential rain starting at 5pm. Therefore, Uber fares were 1.2x-2x times the normal fare, but the real problem is that there were no UberX’s, no Uber Black Cars, no Uber SUVs!.   In the past 15 years traveling to Mexico I always managed without Ubers, but once you get used to a good thing… well, you know how it goes.

Politicians, made even more wary due to coming local elections, seem to be siding with the entrenched Taxi syndicate.

Here’s my take -from a user perspective, clearly I am not a taxi industry expert-:

Cab drivers in Mexico, Miami, and elsewhere have a genuine gripe because they are required to hold permits, are regulated, etc

However, limiting the issue of taxi licenses has created a sort of monopoly which favors those early buyers of taxi licenses and the taxi companies.   This is not dissimilar from the protectionist policies of the trade guilds in medieval times.   As a consequence, consumers suffer.   Taxi’s, at least in Miami and Mexico, are dirty, old, smelly and unreliable.

This is why Uber is so popular.  The service is great, but in comparison with a very poor taxi service, it is indispensable.

So my take is that Uber and similar services should be allowed to operate, but the cities should re-think their regulation of official taxi’s and of Uber drivers to provide a level-playing field for both and minimal conditions of safety for passengers and drivers. The city will make more money anyways because a better service is already increasing the number of overall rides, and thereby increasing the tax base. I believe even drivers will be better off, as demand for drivers will increase as more consumers use these services.  Who really loses?  The owners of the licenses and the taxi companies since their asset has and will continue to decline in value.  This is unfortunate, but we have not protected Nokia and Motorola from an iPhone, Kodak from digital cameras, and other incumbents which suffer when their industry is completely disrupted by a far better product or service.  Regulation should be adapted to reflect a changing industry but it should not stop consumers from enjoying a better service.



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